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This Lease ("Lease") dated as of September 3, 1996, is entered into between
HAMM'S BUILDING ASSOCIATES, a California Limited Partnership ("Landlord"), and
Individual, Inc., ("Tenant").
Recitals
A. Landlord is the owner of real property ("Real Property") located at 1550
Bryant Street, San Francisco and the building ("Building") located on it. The
Real Property and the Building are collectively the "Property."
B. Landlord desires to lease to Tenant, and Tenant desires to lease from
Landlord the Premises (as defined below) for the term and subject to the terms,
covenants, agreements, and conditions in this Lease.
For good and valuable consideration the receipt and adequacy of which are
acknowledged, the parties agree as follows:
Section 1. Definitions.
As used in this Lease, the following terms shall have the meanings
specified in this Section 1.
Alterations is defined in Section 8.
Base Operating Expenses means the Operating Expenses paid or incurred by
Landlord in the Base Year.
Base Property Taxes means the amount of Property Taxes for the tax year
ending June 30 of the Base Year.
Base Rent means the Base Rent as set forth in the Basic Lease Information.
Base Year means the calendar year specified in the Basic Lease Information
as the Base Year.
Basic Lease Information is attached to and incorporated in this Lease as
Exhibit A.
Building means the building constructed on the Real Property known as 1550
Bryant Street, San Francisco California, commonly known as the Hamm's Building,
any property interest in the area of The Hamm's Building and all other
improvements on or appurtenances to the Real Property or the streets abutting
the Real Property. The Building includes, but is not limited to, an office
building with twelve (12) floors of office space and an open air parking lot
located as shown on the attached site plan.
Commencement Date means the Commencement Date as set forth in the Basic
Lease Information.
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Common Area means the total area on a floor consisting of rest rooms,
janitor, telephone and electrical closets, mechanical areas, public corridors
providing access to tenant space, public stairs, elevator shafts and pipe
shafts, together with their enclosing walls.
Deposit is defined in Section 24.
Escalation Rent is defined in Section 4(a).
Encumbrance is defined in Section 36.
Event of Default is defined in Section 18.
Landlord is defined in the preamble.
Legal Requirements is defined in Section 14.
Lease is defined in the preamble.
Tenant is defined in the preamble.
Tenant's Percentage Share means the percentage figure specified as Tenant's
Percentage Share in the Basic Lease Information. Tenant's Percentage Share has
been obtained by dividing the net rentable area of the Premises, as specified in
the Basic Lease Information, by the total net rentable area of the Building,
which is 160,029 square feet, and multiplying that quotient by one hundred
(100). In the event the rentable area of the Premises is increased or decreased
by the addition to or deletion from the Premises of any office space, Tenant's
percentage share shall be appropriately adjusted.
Operating Expenses means all reasonable costs of management, operation and
maintenance of the Building determined by generally accepted accounting
principles, including without limitation: wages, salaries and payroll burden of
employees excluding employees above the rank of Building Manager, property
management fees at current market rates, janitorial, maintenance, security and
other services; Building office rent or rental value for a building office as
small as reasonably practical to operate the building; power, water, waste
disposal and other utilities; materials and supplies; maintenance and repairs
(including the repair and replacement of glass and the roof covering or
membrane); permit and license costs; insurance premiums and the deductible
portion of any insured loss under Landlord's insurance to the extent reasonable;
accounting, legal or other professional fees of independent service providers
who are not employees of Landlord incurred in connection with operating the
Building and the calculation of Operating Expenses and Property Taxes, provided,
however, if Landlord incurs any costs for; any capital improvements made to the
Building by Landlord after the Base Year that (i) are made in the reasonable
expectation of reducing other Operating Expenses, or (ii) are required under any
governmental law or regulation that was not applicable to the Building at the
time it was constructed, such cost shall be-amortized over the useful life of
such capital improvements, together with interest on the unamortized balance at
the rate equal to that paid by Landlord on funds borrowed for the purpose of
constructing or installing those capital improvements, and only
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the annual amortized portion of such costs, with such interest, shall be
included in Operating Expenses for any calendar year.
Notwithstanding any contrary provision of this Lease, Operating Expenses
shall not include costs relating to the following:
i. principal, interest or other changes relating to indebtedness secured
by an Encumbrance;
ii. rent, additional rent or other charges payable under any Underlying
Lease;
iii. leasehold improvements made in connection with the preparation of any
portion of the Building for occupancy by a new or existing tenant
which is not generally beneficial to all tenants of the Building;
iv. any expansion of the rentable area of the Building;
v. costs, expenses or charges properly chargeable or attributable to a
particular tenant or tenants;
vi. any utility or other service used or consumed in premises leased to
any tenant or occupant of the Building, but only if Tenant's use or
consumption of such utility or other services is separately metered
or sub-metered at the Premises;
vii. efforts to lease portions of the Building or to procure new tenants
for the Building, including advertising expenses, leasing commissions
and attorney's fees;
viii. negotiations or disputes with any tenant of the Building;
ix. Landlord's general overhead not directly related to the management or
operations of the Building;
x. depreciation of the Building;
xi. repairs and replacements arising out of a fire or other casualty,
except a reasonable deductible under insurance carried by Landlord or
out of an exercise of the eminent domain affecting the Building or
any of the parking areas serving the Building;
xii. Landlord's or Landlord's managing agents' breach or violation of a
law, lease or other obligation, including fines, penalties and
attorneys' fees;
xiii. compensation paid to employees or other person in connection with
commercial concession operated by Landlord or Landlord's managing
agent;
xiv. fees for licenses, permits or inspections that are not part of
routine maintenance of the Building or result from the act or
negligence of Landlord, Landlord's managing agent or any other tenant
of the building;
xv. remediation of environmental contamination existing as of the date of
this Lease and any environmental testing required by Landlord's
lender;
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xvi. compliance with laws existing as of the date of this Lease,
including without limitation the Americans With Disabilities Act,
and any environmental laws other than reinterpretations of existing
laws, subsequent to execution of this Lease;
xvii. sculptures, paintings and other works of art;
xviii. any items with respect to which Landlord receives reimbursement
from insurance proceeds of from a third party;
xix. Property Taxes.
Actual Operating Expenses for both the Base Year and each subsequent
calendar year will be adjusted to equal Landlord's reasonable estimate of
Operating Expenses had ninety-five (95) percent of the Building been occupied.
Premises means the portion of the Building located on the floor or floors
specified in the Basic Lease Information which is cross-hatched on the plan or
plans attached to this Lease as Exhibit B.
Property is defined in Recital A of this I-case.
Property Taxes means all real property taxes and general, special or
district assessments or other governmental impositions, of whatever kind,
imposed on or by reason of the ownership or use of the Property; governmental
charges, fees or assessments for police, fire or other governmental services;
service payments in lieu of taxes and taxes and assessments of every kind levied
in addition to, in lieu of or in substitution for existing or additional real or
personal property taxes on the Property; and all real estate tax consultant
expenses and attorney fees of consultants and attorneys who are not employees of
Landlord incurred for the purpose of maintaining an equitable assessed valuation
of the Building or contesting the validity of any taxes, assessments or charges
described above. Property Taxes shall exclude any income, franchise, gift,
estate, inheritance, transfer and excise taxes.
Real Property is defined in Recital A of this Lease.
Rentable Area means the rentable area of the Premises specified on the
Basic Lease Information. If any office space is added to or deleted from the
Premises, the rentable area of the space added or deleted shall mean: (a) as to
an entire floor added to or deleted from the Premises, all areas within outside
permanent Building walls, measured to the inside glass surface of outside
permanent Building walls, including rest rooms; janitor, telephone, and
electrical closets; allocated mechanical areas and columns and projections
necessary to the Building, but excluding public stairs, elevator shafts, and
pipe shafts, together with their enclosing walls; (b) as to a portion of a floor
added to or deleted from the Premises, the aggregate of the Usable Area of the
portion of the floor added to or deleted from the Premises, plus the result
obtained by multiplying the area of the Common Area on this floor by a fraction,
the numerator of which is the aggregate of the usable area of the portion of the
floor added to or deleted from the Premises and the denominator of which is the
usable area of all tenant space on the floor.
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Substantially Complete and Substantial Completion are defined in Paragraph
3 of Exhibit D.
Term is defined in Section 3 of this Lease.
Termination Date means the Termination Date in the Basic Lease Information.
Underlying Lease is defined in Section 36.
Usable Area means all floor area in a tenant space, measured to the inside
glass surface of outer Building walls, to the office side of corridors and other
permanent partitions, and to the center of partitions that separate the tenant
space from adjoining tenant spaces, without deduction for columns and
projections necessary to the Building.
Section 2. Premises.
Landlord leases to Tenant, and Tenant leases from Landlord the Premises (as
set forth in the Basic Lease Information) for the term and subject to the terms,
covenants, agreements, and conditions set forth in this Lease. Tenant shall have
the right, in common with others entitled thereto, to use: the driveways and
sidewalks necessary for access to the Building and the parking areas on the Real
Property; the entrances, lobbies, corridors, elevators and stairways necessary
for access to the Premises; the pipes, wires and conduits and the plumbing,
electrical, heating, ventilating, air conditioning, emergency and other
mechanical systems and equipment serving the Premises exclusively; and any other
common areas and facilities provided to tenants of the Building by the Landlord
from time to time.
Section 3. Term; Condition of Premises.
(a) The term ("Term") of this Lease shall commence on the Commencement Date
(as set forth in the Basic Lease Information) and, unless sooner terminated as
later provided, shall end on the Termination Date (as set forth on the Basic
Lease Information). Landlord shall deliver the Premises to Tenant on the
Commencement Date in broom clean condition, after having Substantially Completed
the Tenant Improvements, free of tenants and occupants. If the Tenant
Improvements are completed before the Commencement Date, and if Tenant desires
to take occupancy in advance of that date, Landlord shall deliver the Premises
to Tenant at that time in advance of a date that will be mutually approved by
Landlord and Tenant and, notwithstanding anything to the contrary contained in
this Lease, the Term of the Lease shall commence on delivery. Landlord shall use
its best efforts to deliver the premises to Tenant in the condition required
under this Lease on the Scheduled Commencement Date, but Landlord shall not be
liable for delays in delivery arising from acts of force majeure.
(b) Tenant shall have the option, exercisable by written notice to Landlord
no later than nine months before the end of the Term, to extend the Term for a
period of five years, the terms and conditions of this Lease, except that the
annual rate of Base rent during such five-year extended term shall equal 95 % of
the fair market rent to be determined by the comparable rent charged in the
Hamm's Building for premises comparable to the subject premises with five-year
terms, but not less than last month's rent. If Landlord and Tenant are unable to
agree on the Fair
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Market Rent within such 30 days after delivery of such notice to Landlord, the
Fair Market Rent shall be determined according to the following procedures:
i. At any time after such 30-day period, Landlord and Tenant shall have
the right, by written notice (a "Notice of Arbitration") to the other, to
demand arbitration of the calculation of the Fair Market Rent. The party
demanding arbitration (the "first party") shall appoint an arbitrator in
the Notice of Arbitration. Within seven days after the Notice of
Arbitration is given, the other party (the "second party") shall by notice
to the first party appoint a second arbitrator. If the second party fails
to appoint a second arbitrator within such seven-day period, the position
taken by the first party shall be deemed to be the correct calculation of
the Fair Market Rent.
ii. Within seven days after the designation of the second arbitrator,
Landlord and Tenant shall submit their respective positions with respect to
the calculation of the Fair Market Rent to the two arbitrators. Within
fourteen days after the designation of the second arbitrator, the two
arbitrators shall conduct such hearings and investigations as they deem
appropriate and determine the correct calculation of the Fair Market Rent.
The arbitrators, or either of them, shall give notice of such resolution
(or notice of their inability to reach agreement, as the case may be) to
the Landlord and the Tenant within such fourteen-day period. Any agreement
of the two arbitrators shall be binding upon the Landlord and the Tenant.
iii. If the two arbitrators are unable to reach and agreement within such
fourteen-day period, the two arbitrators shall, within such fourteen-day
period, designate a third arbitrator. If the two arbitrators fail to agree
upon the designation of a third arbitrator within such fourteen-day period,
then they or either of them shall give notice of such failure to agree to
Landlord and Tenant within such fourteen-day period. If Landlord and Tenant
fail to agree upon the selection of a third arbitrator within seven days
after the arbitrators give such notice, then either party on behalf of both
may apply to a court of competent jurisdiction, for the designation of such
third arbitrator.
iv. Within seven business days after the designation of the third
arbitrator, the parties shall submit their respective positions with
respect to the calculation of the Fair Market Rent to the third arbitrator.
Within fourteen days after the designation of the third arbitrator, the
third arbitrator shall conduct such hearings and investigation as he or she
may deem appropriate and determine the correct calculation of the Fair
Market Rent. Within such fourteen-day period, the three arbitrators shall
give notice of such resolution to Landlord and Tenant. The third
arbitrator's determination shall be binding upon Landlord and Tenant.
v. All arbitrators shall be qualified real estate professionals who shall
have had at least ten years of experience appraising buildings comparable
to the Building in the Greater San Francisco area. Landlord and Tenant
shall each be entitled to present evidence to the arbitrators in support of
their respective positions. The arbitrators shall not make any
determination inconsistent with the terms of this Lease. The arbitrators
shall not have the power to add to, modify or change any of the provisions
of this Lease. The determination of the arbitrator(s) shall be conclusive
and shall have the same force as a judgment in a court of competent
jurisdiction. Judgment on the determination made by the arbitrator(s) under
the foregoing provisions may be entered in any court of competent
jurisdiction.
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vi. Each party shall pay the fees, costs and expenses of the arbitrator
appointed by such party and of the attorneys and expert witnesses of such
party and one-half of the other fees, costs and expenses of arbitration
properly incurred under this Lease.
Section 4. Rental.
(a) Tenant shall pay to Landlord throughout the Term as rental for the
Premises the Base Rent, subject to the following adjustments:
(i) The rental payable during each calendar year subsequent to the
Base Year shall be(i) the Base Rent, plus (ii) Tenant's Percentage Share of the
total dollar increase, if any, in Operating Expenses paid or incurred by
Landlord in that year over the Base Operating Expenses, and also increased by
Tenant's Percentage Share of the total dollar increase, if any, in Property
Taxes paid by Landlord in that year over the Base Property Taxes ("the
Escalation Rent"). The increased rental due pursuant to this Section 4(a)(ii) is
the "Escalation Rent."
(b) Base Rent shall be paid to Landlord in equal monthly installments, in
advance, on or before the first day of calendar month during the Term of this
Lease. Tenant shall pay the monthly installment of Base Rent for the first full
calendar month of the Term at the time of the execution of this Lease. In the
event the Term of this Lease commences on a day other than the first day of a
calendar month or ends on a day other than the last day of a calendar month, the
monthly rental for the first and last fractional months of the Term of this
Lease shall be prorated according to the fraction of the total number of days in
such month falling within the Term, and such prorated payment shall be due on
the first day of such month within the Term. If the term of this lease commences
on a day other thin the first day of a calendar year or ends on a day other than
the last day of a calendar year, the Base Rent and Escalation Rent for the first
and last calendar years of the Term shall be prorated according to the fraction
of the total number of days in such year falling within the Term.
(c) All sums of money due to Landlord under this Lease, not specifically
characterized as rental, shall constitute additional rent and shall be due
within ten (10) days after receipt by Tenant of a billing. If any sum is not
paid when due, it shall be collectible as additional rent with the next
installment of rental falling due.
(d) Tenant acknowledges that late payment of rent and other sums due under
this Lease after the expiration of any applicable cure period under Section
18(a) will cause Landlord to incur costs not contemplated by this Lease, the
exact amount of which will be difficult to ascertain. These costs include, but
are not limited to, processing and accounting charges and late charges which may
be imposed on Landlord by the terms of any trust deed covering the Premises.
Accordingly, if any installment of rent or any other sums due from Tenant are
not received when due, or if a cure period is applicable under Section 18(a),
prior to the expiration of the cure period, Tenant shall pay to Landlord a late
charge equal to five percent (5%) of the overdue amount. The parties agree that
the late charge represents a fair and reasonable estimate of the costs Landlord
will incur because of late payment. Acceptance of the late charge by Landlord
shall not constitute a waiver of Tenant's default for the overdue amount, nor
prevent Landlord from exercising the other rights and remedies granted under
this Lease.
[INITIALS APPEAR HERE] [Initials of landlord]
----------------------
[INITIALS APPEAR HERE] [Initials of Tenant]
----------------------
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(e) Any amount due to Landlord other than monthly rental, if not paid
within five (5) days following the due date will bear interest from the due date
until paid at the rate of ten percent (10%) per year. However, interest shall
not be payable on late charges incurred by Tenant nor on any amounts on which
late charges are paid by Tenant to the extent this interest would cause the
total interest to be in excess of that legally permitted. Payment of interest
shall not excuse or cure any default by Tenant.
(f) All payments due shall be paid to Landlord, without deduction or offset
except as set forth in this Lease, in lawful money of the United States of
America at Landlord's address for notices under this Lease or to another person
or at another place as Landlord may designate by notice to Tenant. If Tenant
pays by check and the check is returned for non-sufficient funds more than once,
upon request of the Landlord, the Tenant shall make future payments by cashiers
check.
Section 5. Escalation Rent.
Escalation Rent shall be paid monthly on an estimated basis, with
subsequent annual reconciliation, in accordance with the following procedures:
(a) No later than fifteen (15) days prior to the end of the Base Year and
no later than fifteen (15) days prior to the end of each subsequent calendar
year, or as soon after that time as practicable, Landlord shall give Tenant
notice of Landlord's estimate of any Escalation Rent due under Section 4(a) for
the ensuing calendar year. On or before the first day of each month during the
ensuing calendar year, Tenant shall pay to Landlord one-twelfth (1/12th) of the
estimated Escalation Rent. If Landlord fails to give notice as required in this
Section, Tenant shall continue to pay on the basis of the prior year's estimate
until the month after that notice is given. If at any time it appears to
Landlord that the Escalation Rent for the current calendar year will vary from
the estimate, Landlord may, by notice to Tenant, revise the estimate for that
year, and subsequent payments by Tenant for that year shall be based on the
revised estimate.
(b) Within ninety (90) days after the close of each calendar year, or as
soon after the ninety (90) day period as practicable, Landlord shall deliver to
Tenant a statement of the actual Escalation Rent for that calendar year showing
Operating Expenses and Property Taxes on the basis of which the actual
Escalation Rent was determined. At Tenant's request, Landlord shall provide
Tenant reasonable supporting detail underlying the calculations of Operating
Expenses and Property Taxes. If Landlord's statement discloses that Tenant owes
an amount that is less than the estimated payments for the calendar year
previously made by Tenant, Landlord shall credit the excess first against any
sums then owed by Tenant, and then against the next payments of rental due, or,
after the end of the Term, Landlord shall pay such excess to Tenant at the time
of the delivery of Landlord's statement for the last calendar year of the Term.
If Landlord's statement discloses that Tenant owes an amount that is more than
the estimated payments for the calendar year previously made by Tenant, Tenant
shall pay the deficiency to Landlord within thirty (30) days after delivery of
the statement.
(c) Landlord shall maintain at all times during the term of this Lease, at
the office of Landlord in the Building or such other office as Landlord may
designate full, complete and accurate books of account and records prepared in
accordance with generally accepted accounting principles with respect to
Escalation Rent, and shall retain such books and records, as well as contracts,
bills, vouchers, and checks, and such other documents as are reasonably
necessary to properly audit the Escalation Rent. Upon reasonable notice from
Tenant, Landlord shall make available for Tenant's inspection (or inspection
performed by Tenant's accountant and/or
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consultants) at Landlord's office in the Building, during normal business hours,
Landlord's books and records relating to the Escalation Rent for the previous
calendar year. If Tenant's inspection reveals that Tenant was overcharged for
escalation rent, the amount of the overcharge shall be promptly refunded to
Tenant.
(d) The termination of this Lease shall not affect the obligations of the
parties pursuant to Section 5(b) to be performed after the termination.
Section 6. Use.
The Premises shall be used for general office purposes. Tenant shall not do
or permit to be done on the Premises, nor bring or keep or permit to be brought
or kept in the Premises, anything (a) which is prohibited by or in conflict with
any law, ordinance, or governmental rule or, (b) which is prohibited by the
standard form of fire insurance policy or, (c) which will increase the existing
rate of or affect fire or other insurance on the Building or its contents or
cause a cancellation of any insurance policy covering the Building or any part
of it or its contents. Tenant shall not use or store in the Premises any
hazardous or toxic substances, with the sole exception of reasonably necessary
substances that are kept in reasonably necessary quantities for normal office
operations, provided that their use and storage are in accordance with
applicable laws. Tenant shall not do or permit anything to be done on the
Premises that will obstruct or interfere with the rights of other tenants of the
Building, or injure them, or use or allow the Premises to be used for any
unlawful purposes, nor shall Tenant cause, maintain, or permit any nuisance or
waste on or about the Premises.
Section 7. Services.
(a) Landlord shall maintain in good condition and working order and in
compliance with all applicable laws lobbies, stairs, elevators, corridors, rest
rooms, and other Common Areas, all exterior landscaping, the driveways,
sidewalks and parking areas on the Real Property, the exterior windows, the
mechanical, plumbing, emergency, heating, ventilating, air conditioning and
electrical equipment serving the Building, the roof, foundation and other
structural components of the Building, except for damage, excluding normal wear
and tear, caused by the Tenant. Damage caused by Tenant, other than normal wear
and tear by Tenant, shall be repaired by Landlord at Tenant's expense. The
standard of maintenance shall be equal to that of other office buildings of a
similar class in San Francisco, California.
(b) Landlord shall furnish (i) electricity for lighting and the operation
of office machines, (ii) heat and air conditioning, to the extent reasonably
required for the comfortable occupancy by Tenant in Tenant's use of the Premises
during the period from 7:00 a.m. to 7:00 p.m. on weekdays, except holidays, or a
shorter period as may be prescribed by applicable policies or regulations
adopted by any utility or governmental agency, (iii) elevator service, (iv)
lighting replacement, for building standard lights, (v) rest room supplies, (vi)
window washing with reasonable frequency, (vii) water for the rest rooms and
kitchen areas, and (viii) security guard services and daily janitor services
during the times and in the manner that these services are customarily furnished
in comparable office buildings in the area. Landlord may establish reasonable
measures to conserve energy and water, including but not limited to, automatic
light shut off after hours and efficient lighting forms, so long as these
measures do not unreasonably interfere with Tenant's use of the Premises.
(c) Landlord shall not be in default under this Lease, nor be liable for
any damages resulting from, nor shall the required rental be abated because of
(i) any reasonably necessary
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installation, use, or interruption of use of any equipment in connection with
furnishing the previously listed services, (ii) failure to furnish or delay in
furnishing these services, when failure or delay is caused by accident or
conditions beyond the reasonable control of Landlord or by necessary repairs or
improvements to the Premises or to the Building, or (iii) the limitation,
curtailment, rationing, or restrictions on use of water, electricity, gas, or
any other form of energy serving the Premises or the Building caused by
circumstances beyond the reasonable control of Landlord; provided, however,
Landlord shall use reasonable efforts to avoid interference with Tenant's use
and occupancy of the Premises, and Landlord shall use reasonable efforts to
diligently remedy interruptions in the furnishing of these services.
Section 8. Alterations.
Tenant shall not make or allow any alterations, additions, or improvements
to the Premises or any part of the Premises ("Alterations"), except for pre-
occupancy tenant improvements ("Tenant Improvements") as evidenced by Exhibit E
("Construction Documents"), without Landlord's prior consent, which shall not be
unreasonably withheld, provided, however, Tenant shall have the right, with
Landlord's prior consent, to make alterations, additions or improvements to the
Premises which do not cost more than $10,000 in any one instance and which do
not affect the base mechanical systems of the Building. The installation of
furnishings, fixtures, equipment, or decorative improvements, none of which
shall affect Building systems or the structure of the Building, and the
repainting or recarpeting of the Premises, shall not constitute Alterations. All
Alterations (except Tenant's trade fixtures and personal property) shall
immediately become Landlord's property and, at the end of the Term, shall remain
on the Premises without compensation to Tenant, unless Landlord elects by notice
to Tenant at the time of installation to have Tenant remove any Alterations that
are peculiar to Tenant's use of the Premises and are not normally required or
used by other tenants. In this event, Tenant shall bear the cost of restoring
the Premises to their condition prior to the installment of the Alterations.
Section 9. Repairs; Landlord's Reservation of Rights.
(a) At all times during the term of this Lease and at Tenant's sole cost,
except as set forth in Section 7 of this Lease. Tenant shall keep the Premises
in good condition and repair; ordinary wear and tear, eminent domain, and damage
to the Premises by fire, earthquake, or act of God or the elements are excepted.
At the end of the term of this Lease, Tenant shall surrender to Landlord the
Premises and all Alterations that are to remain in the Premises in the same
condition as when received; ordinary wear and tear and damage by fire,
earthquake, or act of God or the elements are excepted. Landlord has no
obligation and has made no promise to alter, remodel, improve, repair, decorate,
or paint the Premises or any part of them, except as specifically set forth in
Exhibit E. Landlord has made no representations respecting the condition of the
Premises or the Building, except as specifically set forth in this Lease.
(b) Landlord reserves the right, at any time and from time to time, without
the same constituting an actual or constructive eviction, but provided that
Landlord does not unreasonably interfere with Tenant's use and occupancy of the
building, to (i) make alterations, additions, repairs, improvements to or in, or
to decrease the size of area of all or any part of the Building (except the
Premises), the fixtures and equipment therein, the heating, ventilation, air-
conditioning, plumbing, electrical, fire protection, life safety, security and
all mechanical systems of the building ("Building Systems"), the common areas
and all other parts of the Building; (ii) to change the arrangement and/or
location of entrances or passageways, doors and doorways, corridors, elevators,
stairs, toilets and other public parts of the Building and to create additional
rentable areas through use or enclosure of common areas; (iii) to change the
Building's name or street
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address or to change the room number or numbers of the Premises; (iv) to
install, affix and maintain any and all signs on the exterior and interior of
the Building.
Section 10. Damage or Destruction.
(a) In the event the Premises or any portion of the Building necessary for
Tenant's occupancy are damaged by fire, earthquake, act of God, the elements, or
other casualty, within thirty (30) days after that event, Landlord shall notify
Tenant of the estimated time, in Landlord's reasonable judgment, required for
repair or restoration. If the estimated time is thirty (30) days or less after
the commencement of the physical work and ninety (90) days or less after the
casualty event, Landlord shall proceed promptly and diligently to adjust the
loss with applicable insurers, to secure all required governmental permits and
approvals, and to repair or restore the Premises or the portion of the Building
necessary for Tenant's occupancy. This Lease shall remain in full force, except
that until such repairs and restoration are complete, Base Rent and Escalation
Rent shall abate equitably on proration to the extent of such damage and its
effect on Tenant's use of the Premises.
(b) If the estimated time for repair or restoration is in excess of thirty
(30) days after the commencement of the physical work or ninety (90) days after
the casualty event, Tenant or Landlord may elect to terminate this Lease as of
the date of the casualty event by giving notice to the other party within
fifteen (15) days following receipt of Landlord's notice of the estimated time
for repair.
Section 11. Subrogation.
Landlord and Tenant shall each obtain from their respective insurers under
all policies of fire, theft, public liability, worker's compensation, and other
insurance maintained during the term of this Lease covering the Building, or any
portion of it, or operations in it, a waiver of all rights of subrogation that
the insurer of one party might have against the other party. Landlord and Tenant
shall each indemnify the other against any loss or expense, including reasonable
attorney fees, resulting from the failure to obtain this waiver.
Section 12. Insurance.
Tenant, at its expense, shall maintain in full force during the Term of
this Lease, a policy or policies of public liability and property damage
insurance insuring against all liability, subject to standard ISO CGL policy
exclusions, of Tenant and its representatives, agents and visitors for personal
or bodily injury or property damage arising out of or incurred in connection
with Tenant's use or occupancy of the Premises or the Real Property. Such policy
or policies subject to standard ISO CGL policy exclusions shall further insure
the indemnification obligations of Tenant under this Lease. Each policy of
insurance required under this Lease shall be in a form, in an amount, and with
an insurer reasonably acceptable to Landlord, but no event less than $1,000,000
combined single limit and shall require at least ten (10) days' written notice
to Landlord prior to any termination of the policy. Each policy of liability
insurance shall name the Landlord, and its property managers as additional
insured and provide that it is primary, and not contributing with, any policy
carried by Landlord covering the same loss. Tenant shall provide to Landlord,
upon request, evidence that the insurance required to be carried by Tenant is in
full force and effect and the premiums have been paid.
Section 13. Indemnification.
Tenant and Landlord each waives all claims against the other party for
damage to any property or injury or death of any person on the Premises arising
at any time and from any cause
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other than the sole negligence or willful misconduct of the other party's
employees, agents, or contractors. Tenant and Landlord each shall hold the other
party harmless from and defend the other party against all claims, liability,
damage, or loss arising out of any injury or death of any person or damage to or
destruction of property attributable to the action or inaction (where there is a
duty to act) of the indemnifying party, except that caused by the sole
negligence or willful misconduct the other party or its agents, contractors, or
employees. Tenant and Landlord each shall also hold the other party harmless
from any liability, cost, or expense arising from the indemnifying party's use
or storage on the property of any hazardous or toxic substance. These indemnity
obligations shall include reasonable attorney fees, investigation costs, and all
other reasonable costs incurred by the indemnified party from the first notice
that any claim or demand is to be made or may be made. The provisions of this
Section shall survive the termination of this Lease for any event occurring
prior to the termination.
Section 14. Compliance with Legal Requirements.
At Tenant's sole cost, Tenant shall promptly comply with all laws and
governmental rules now or later in force; with the requirements of any board of
fire underwriters or other similar body now or in the future constituted; with
any direction or occupancy certificate issued by public officers ("Legal
Requirements"), insofar as they relate to the use, or occupancy of the Premises.
Excluded are (a) structural changes or changes to the electrical, mechanical, or
plumbing systems of the Building, except to the extent necessitated by Tenant's
acts or by improvements made for Tenant (other than the tenant improvements to
be made pursuant to this Lease by Landlord); (b) alterations or improvements to
the Building as a whole or the Premises of tenants generally that are not by law
the tenants' responsibility with which to comply; and (c) work necessitated by
defects in the construction of the Building. Landlord shall comply in a timely
manner with all Legal Requirements that are not Tenant's responsibility under
this Section.
Section 15. Assignment and Subletting.
(a) Except as otherwise expressly permitted by this Lease, Tenant shall
not, without the prior written consent of Landlord, which shall not be
unreasonably withheld or delayed, assign or hypothecate this Lease or any
interest in this Lease, sublet the Premises or any part of them, or license the
use of the Premises by any party other than Tenant or Freeloader, Inc. Neither
this Lease nor any interest in this Lease shall be assignable without the
consent of Landlord, which shall not be unreasonably withheld or delayed. Any of
the previous acts without consent shall be void and shall, at the option of
Landlord, constitute a default under this Lease. Landlord shall respond to
Tenant's request for consent to an assignment or sublease within fifteen (15)
days of receiving a written request from Tenant and receipt of documentation
regarding description and financial condition of proposed Tenant and other
necessary information as required by Landlord. Notwithstanding any other
provision of this Lease, Tenant shall have the right to assign this Lease or
sublet any portion of the Premises to an entity controlling, controlled by or
under common control with Tenant or in connection with a merger or consolidation
of or into Tenant of the sale of all or substantially all of Tenant's assets
(any of the foregoing be "Affiliate Transfers)".
(b) No sublessee shall have a right to further sublet without Landlord's
prior consent, which may not be unreasonably withheld, and any assignment by a
sublessee of the sublease shall be subject to Landlord's prior consent in the
same manner as if Tenant were entering into a new sublease.
(c) In the case of an assignment or subletting (other than a sublease in an
affiliate transfer), any sums or economic consideration received by Tenant as a
result of the assignment or subletting
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shall be paid to Landlord after first deducting (i) in the case of a sublet, the
rental due under this Lease, prorated to reflect only rental allocable to the
sublet portion of the Premises, (ii) any tenant improvements paid for by Tenant,
and (iii) the cost of any real estate commissions, reasonable attorney fees, or
other out-of-pocket expenses paid by Tenant in connection with the assignment or
subletting.
(d) Regardless of Landlord's consent, no subletting or assignment shall
release or alter Tenant's obligation or primary liability to pay the rental and
perform all other obligations under this Lease. Consent to one assignment or
subletting shall not be deemed consent to any subsequent assignment or
subletting. In the event of default by any assignee or successor of Tenant in
the performance of any of the terms of this Lease, after notice of default to
Tenant pursuant to Section 18 and the expiration of any applicable cure period,
Landlord may proceed directly against Tenant without the necessity of exhausting
remedies against the assignee or successor.
(e) If Tenant assigns this Lease, sublets the Premises, or requests the
consent of Landlord to any assignment, subletting, hypothecation, or other
action requiring Landlord's consent under this Lease, Tenant shall pay
Landlord's reasonable attorney fees incurred in connection with the action, not
to exceed nine hundred ($900.00) dollars.
Section 16. Rules.
Tenant shall comply with the rules attached to and incorporated in this
Lease as Exhibit C, and after notice, with all reasonable modifications and
additions to these rules, from time to time promulgated in writing by Landlord
provided such modifications and additions apply generally to all tenants of the
Building. Landlord shall not be responsible to Tenant for the nonperformance of
any of these rules by any other tenant or occupant of the Building, but Landlord
shall take reasonable steps to enforce any rules, the nonperformance of which by
other tenants materially and adversely affects Tenant in the use of the
Premises. However, if any rule conflicts with any term, covenant, or condition
of this Lease, this Lease shall prevail. In addition, no rule, or any subsequent
amendments to it adopted by Landlord shall alter, reduce, or adversely affect
any of Tenant's rights or enlarge Tenant's obligations under this Lease.
Section 17. Entry by Landlord.
Landlord may enter the Premises at reasonable hours with notice to Tenant
to (a) inspect the Premises; (b) exhibit the Premises to prospective purchasers,
lenders tenants; (c) determine whether Tenant is complying with all obligations
under this Lease; (d) supply janitorial service and any other services to be
provided by Landlord under this Lease; (e) post notices of nonresponsibility;
and (f) make repairs or perform maintenance required of Landlord by this Lease,
make repairs to any adjoining space or utility services, or make repairs,
alterations, or improvements to any other portion of the Building. However, all
this work shall be done as promptly as reasonably possible and cause as little
interference to Tenant as reasonably possible. Subject to Landlord's
undertakings in the previous sentence, Tenant waives any damage claims for
inconvenience to or interference with Tenant's business or loss of occupancy or
quiet enjoyment of the Premises caused by Landlord's entry. At all times
Landlord shall have a key with which to unlock the doors on the Premises,
excluding Tenant's vaults, safes, and similar areas designated as secure areas
in writing by Tenant in advance. In an emergency, Landlord shall have the right
to use any means that Landlord deems proper to open Tenant's doors and enter the
Premises. Entry to the Premises by Landlord in an emergency shall not be
construed as a forcible or unlawful entry, a detainer, or an actual or
constructive eviction of Tenant.
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Section 18. Events of Default.
The following events shall constitute events of default under this Lease (each
an Event of Default):
(a) failure by Tenant to pay when due any rent or other sum payable under
this Lease and the continuation of this failure for ten (10) or more days after
notice of the default from Landlord;
(b) failure to make payments of rent when due under this Lease three (3) or
more times during any twelve (12) month period during the term of this Lease;
(c) a default by Tenant in the performance of any of the terms, covenants,
agreements, or conditions in this Lease, other than a default by Tenant in the
payment when due of any rent or other sum payable under this Lease, and the
continuation of the default beyond fifteen (15) days after notice by Landlord
or, if the default is curable and would require more than fifteen (15) days to
remedy, beyond the time reasonably necessary for cure; provided, however, that
if Tenant has defaulted in the performance of the same obligation two (2) or
more times in twelve (12) months and notice of the default has been given by
Landlord in each instance, no notice shall be required after this until the
expiration of twelve (12) months without any default by Tenant;
(d) the bankruptcy or insolvency of Tenant, a transfer by Tenant in fraud
of creditors, an assignment by Tenant for the benefit of creditors, or the
commencement of proceedings of any kind by or against Tenant under the Federal
Bankruptcy Act or under any other insolvency, bankruptcy, or reorganization act,
unless Tenant is discharged from voluntary proceedings within ninety (90) days;
(e) the appointment of a receiver for a substantial part of Tenant's
assets;
(f) the abandonment of the Premises; and
(g) the levy upon this Lease or any estate of Tenant under this Lease by
attachment or execution and the failure to have the attachment or execution
vacated within sixty (60) days.
Section 19. Termination upon Default.
On occurrence of any Event of Default by Tenant, Landlord may, in addition
to any other rights and remedies given here or by law, terminate this Lease and
exercise remedies relating to it without further notice or demand in accordance
with the following provisions:
(a) So long as the Event of Default remains uncured, Landlord shall have
the right to give notice of termination to Tenant, and on the date specified in
this notice, this Lease shall terminate.
(b) If this Lease is terminated, Landlord may, by judicial process, reenter
the Premises, remove all persons and property, and repossess and enjoy the
Premises, all without prejudice to other remedies that Landlord may have because
of Tenant's default or the termination.
(c) If this Lease is terminated by Landlord, Landlord shall have all of the
rights and remedies of a landlord provided by Civil Code (S) 1951.2, in addition
to any other rights and remedies Landlord may have. The damages which Landlord
may recover shall include, without limitation, (i) the worth at the time of
award of the unpaid rent which had been earned at the time of termination; (ii)
the worth at the time of award of the amount by which the unpaid rent which
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would have been earned after termination until the time of the award exceeds the
amount of the rental loss that Tenant proves could have been reasonably avoided;
(iii) the worth at the time of award, computed by discounting the amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of award
plus one percent (1%), of the amount by which the unpaid rent for the balance of
the term after the time of award exceeds the amount of the fair market value of
the Premises for the balance of the Term; (iv) all reasonable legal expenses and
other related costs incurred by Landlord following Tenant's default; (v) all
reasonable costs incurred by Landlord in restoring the Premises to good order
and condition to relet the Premises; and (vi) all reasonable costs, including
without limitation, any brokerage commissions incurred by Landlord in reletting
the Premises. The remedies provided in this Lease are in addition to any other
remedies available to Landlord at law, in equity, by statute, or otherwise.
(d) Even though Tenant has breached this Lease and abandoned the Premises,
this Lease shall continue in effect for so long as Landlord does not terminate
Tenant's right to possession, and Landlord may enforce all rights and remedies
under this Lease, including the right to recover the rental as it becomes due
under this Lease. Acts of maintenance or preservation, efforts to relet the
Premises, or the appointment of a receiver upon initiative of Landlord to
protect Landlord's interest under this Lease shall not constitute a termination
of Tenant's right to possession.
Section 20. Attorney Fees.
If, as a result of a breach or default under this Lease, either party uses an
attorney to secure compliance with Lease provisions, to recover damages, to
terminate this Lease, or to evict Tenant, the non-prevailing party shall
reimburse the prevailing party, on demand, for all reasonable attorney fees and
expenses incurred by the prevailing party in enforcing its rights under this
Lease.
Section 21. Eminent Domain.
If all or any part of the Premises are taken through eminent domain, this Lease
shall terminate for the part taken as of the date of taking. For a partial
taking, either Tenant shall have the right to terminate this Lease for the
balance of the Premises by notice to Landlord within thirty (30) days after the
taking. In the event of any taking, Landlord shall be entitled to all
compensation, damages, income, rent, awards, or any interest that may be paid in
connection with the taking, except for any portion specifically awarded to
Tenant for moving expenses, trade fixtures, equipment, and any leasehold
improvements in the Premises to the extent of the then unamortized value of
these improvements for the remaining term of the Lease as determined in the
award. However, Tenant shall have no claim against Landlord for the value of any
unexpired term of this Lease or otherwise, other than for prepaid rent. In the
event of a partial taking of the Premises that does not result in a termination
of this Lease, the subsequent monthly rental shall be equitably reduced.
Section 22. Estoppel Certificate.
At any time with at least fifteen (15) days' prior notice by Landlord,
Tenant shall execute, acknowledge, and deliver to Landlord a certificate in a
form satisfactory to Landlord certifying, to the best of Tenant's knowledge, to
the extent true: (a) that this Lease is unmodified and in full force or, if
there have been modifications, that this Lease is in full force, as modified,
together with the date and nature of each modification, (b) the amount of the
Base Rent, most recent Escalation Rent, if any, and the date to which the rent
has been paid, (c) that no notice has been received by Tenant of any default
that has not been cured, except defaults specified in the certificate, (d) that
no default of Landlord is claimed by Tenant, except defaults specified in the
certificate, and (e) other matters as may be reasonably requested by Landlord.
Any certificate may be relied on by
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prospective purchasers, mortgagees, or beneficiaries under any deed of trust on
the Building or any part of it.
Section 23. Holding Over.
(a) If, without objection by Landlord, Tenant holds possession of the
Premises after expiration of the term of this Lease, Tenant shall become a
tenant from month-to-month on the terms specified in this Lease, except those
pertaining to the term and any option to extend, but at a monthly rental
negotiable between the Parties, payable in advance on or before the first day of
each month. Each party shall give the other notice of intention to terminate the
tenancy at least one (1) month prior to the date of termination of a monthly
tenancy.
(b) If, over Landlord's objection, Tenant holds possession of the Premises
after expiration of the term of this Lease or expiration of the holdover
tenancy, Tenant shall be deemed to be a tenant-at-sufferance and, without
limiting the liability of Tenant for unauthorized occupancy of the Premises,
Tenant shall indemnify Landlord and any replacement tenant for the Premises for
any damages or loss suffered by either Landlord or the replacement tenant
resulting from Tenant's failure to vacate the Premises in a timely manner. The
monthly rental shall be at one hundred and fifty percent (150%) of the then
prevailing monthly rental paid by tenant.
Section 24. Security Deposit.
Tenant has deposited with Landlord the sum specified in the Basic Lease
Information as the Security Deposit (Deposit). The Deposit shall be held by
Landlord as security for the faithful performance by Tenant of all provisions of
this Lease. If Tenant fails to pay rent or other sums due under this Lease or
defaults with respect to any provision of this Lease, and such failure or
default continues after required notice and the expiration after of any
applicable grace period, Landlord may use or apply, such portion of the Deposit
as is necessary for the payment of rent or other sums in default, for the
payment of any other sums to which Landlord may become obligated because of
Tenant's default, or to compensate Landlord for any loss or damage that Landlord
may suffer because of the Tenant's actions. If Landlord uses or applies the
Deposit, Tenant shall, within ten (10) days after demand, deposit cash with
Landlord in an amount sufficient to restore the Deposit to the full amount, and
Tenant's failure to do so shall be a material breach of this Lease. Landlord
shall not be required to keep the Deposit separate from Landlord's general
accounts. If Tenant performs all of Tenant's obligations under this Lease, the
Deposit, or the amount not applied by Landlord shall be returned, without
interest, to Tenant or at Landlord's option, to the last assignee, if any, of
Tenant's interest under this Lease at the expiration of the Term and after
Tenant has vacated the Premises. No trust relationship is created between
Landlord and Tenant with respect to the Deposit.
Section 25. Landlord's Liability.
Notwithstanding any other term or provision of this Lease, the liability of
the Landlord for its obligations under this lease is limited solely to
Landlord's interest in the Property as the same may from time to time be
encumbered, and no personal liability shall at any time be asserted or
enforceable against any other assets of Landlord or against Landlord's
stockholders, directors, officers or partners on account of any of the
Landlord's actions or obligations under this Lease. In addition, in the event of
the conveyance of title to the Building or the Project, then from and after the
date of such conveyance, Landlord shall be relieved of all liability with
respect to Landlord's obligations to be performed under this Lease.
Section 26. Brokers.
18
Tenant and Landlord each warrants and represents to the other that in the
negotiating or making of this Lease neither Tenant nor anyone acting on its
behalf has dealt with any real estate broker or finder who might be entitled to
a fee or commission for this Lease other than the Tenant's Broker identified in
Exhibit A: Basic Lease Information, whose commission is to be paid by Landlord.
Tenant and Landlord each agrees to indemnify and hold harmless the other from
any claim or claims, including costs expenses and attorney's fees, asserted by
any other broker or finder for a commission based upon any dealings with or
statements made by the indemnifying party.
Section 27. Smoking.
Smoking in the offices is prohibited.
Section 28. Entire Agreement.
There are no oral agreements between Landlord and Tenant affecting this Lease,
and this Lease supersedes and cancels all previous negotiations, arrangements,
brochures, agreements, and understandings between Landlord and Tenant or
displayed by Landlord to Tenant with respect to the subject matter of this
Lease. There are no representations between Landlord and Tenant other than those
contained in this Lease. All implied warranties, including implied warranties of
merchantability and fitness, are excluded.
Section 29. Illegality or Unenforceability of Portion of Lease.
If any provision of this Lease is determined to be illegal or
unenforceable, this determination shall not affect any other provision of this
Lease, and all other provisions shall remain in full force and effect.
Section 30. Governing Law.
This Lease shall be governed by and construed pursuant to law of the State
of California.
Section 31. Parking.
Tenant shall have the option to rent three (3) reserved parking spaces in
Lot A and five (5) in Lot B from Landlord for the duration of this Lease at the
prevailing building rate. Tenant shall be allowed its pro-rata share of parking
permits for Lot B so long as spaces are available.
Section 32. Quiet Enjoyment.
Landlord agrees to and shall in the commencement of this Lease place Tenant in
quiet possession of the premises and shall secure it in the quiet possession
thereof against all persons lawfully claiming the same during the lease term.
Section 33. Automatic Subordination.
If Landlord delivers to Tenant an agreement (a "Non-Disturbance Agreement") from
the holder of any Encumbrance and the Lessor under any Underlying Lease that, if
any such holder or Lessor forecloses or otherwise exercises its rights under its
Encumbrance or if any such Lessor terminates or otherwise exercises its rights
under the Underlying Lease, or if such holder or Lessor otherwise acquires
Landlord's interest in the Lease, such holder or Lessor shall recognize Tenant's
rights under this Lease, shall not disturb Tenant's occupancy of the Premises
under this Lease, and shall assume Landlord's obligation under this Lease, then
this Lease shall be subject and subordinate to:
(a) The lien of any mortgages, deeds of trust, or other encumbrances of the
Building and Real Property ("Encumbrances");
19
(b) All present and future ground or underlying leases of the Building and
Real Property now or hereafter in force against the Building and Real Property
("Underlying Leases");
(c) All renewals, extensions, modifications, consolidations, and
replacements of the items described in subparagraphs (a) - (b); and
(d) All advances made or hereafter to be made on the security of the
Encumbrances.
Despite any other provision of this Section 33, any Encumbrance holder or lessor
may elect that this lease shall be senior to and have priority over that
Encumbrance or Underlying Lease whether this lease is dated before or after the
date of the Encumbrance or Underlying Lease.
Tenant shall agree in each Non-Disturbance Agreement to attorn to the transferee
of Landlord's interest in the Real Property by foreclosure, deed in lieu of
foreclosure, exercise of any remedy provided in any Encumbrance or Underlying
Lease, or operation of law, if requested to do so by the transferee, and to
recognize the transferee as the lessor under this Lease, provided Transferee
agrees to Tenant's quiet possession. The transferee shall not be liable for:
(a) Any acts, omissions, or defaults of Landlord that occurred before the
sale or conveyance; or
(b) the return of any security deposit except for deposits actually paid to
the transferee.
Section 34. Temporary Occupancy.
From the date of the execution of this Lease until ten business days after
the Commencement Date, Tenant shall have the right to occupy approximately 2,000
square feet of rentable area on the second floor of the Building shown as
"Temporary Space" on Exhibit B attached to this Lease, except that Tenant's
monthly installment of Base Rent and Escalation Rent with respect to the
Temporary Space shall total $1.00 per square foot per month. Such monthly
payments shall not commence until Tenant occupies such Temporary Space for the
conduct of its business and shall cease as of the day Tenant vacates such
Temporary Space. If Tenant occupies such Temporary Space for any portion of a
calendar month, the monthly installment of Base Rent and Escalation Rent due
under this Section 34 shall be prorated according to the fraction of the total
number of days in such month that Tenant occupies the Temporary Space for the
conduct of its business.
Section 35. Exhibits.
The exhibits specified in the Basic Lease Information are attached to this
Lease and by this reference made a part of it.
Section 36. Notices.
Any notice under this Lease shall be in writing and shall be delivered by
hand or sent by certified mail, return receipt requested, to Tenant at Tenant's
Address for Notice or if to Landlord at Landlord's Address for Notice, as set
forth on Exhibit A attached to this Lease. Any such notice shall be effective at
the earlier of (i) receipt by such notice or (ii) or three business days after
being so mailed.
Section 37. Arbitration.
Any dispute that arises out of or relating to this Lease or the alleged
breach of this Lease shall, after notice by one party to the other, be submitted
to arbitration in accordance with the process set forth in Section 3 (b), but
all language referred to in that Section as to Fair Market Rent shall instead
refer to the resolution of any such dispute, and all arbitrators shall be
qualified real estate attorneys or other professionals with at least ten (10)
years experience in matters substantially similar to the matter in dispute.
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The parties have executed this Lease as of the date first set forth above.
Landlord: Tenant:
HAMM'S BUILDING ASSOCIATES, a Individual, Inc.
California Limited Partnership
by: RHGA, Inc., General Partner
By: /s/ Rubin Glickman By: /s/ Robert L. Lentz
--------------------------- ------------------------------
Rubin Glickman, President Robert L. Lentz, Vice President
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EXHIBIT "B"
[DIAGRAM DEPICTING FLOORPLAN APPEARS HERE]
22
Exhibit C. Rules
1. The sidewalks, halls, passages, exits, entrances, shopping malls,
elevators, escalators, and stairways of the Building shall not be obstructed by
any of the tenants or used for any purpose other than for ingress to and egress
from their respective Premises. The halls, passages, exits, entrances, shopping
malls, elevators, escalators, and stairways are not for the general public, and
Landlord shall in all cases retain the right to control and prevent access to
them by all persons whose presence in the judgment of Landlord would be
prejudicial to the safety, character, reputation, and interests of the Building
and its tenants. However, nothing here shall be construed to prevent access to
persons with whom any tenant normally deals in the ordinary course of business,
unless these persons are engaged in illegal activities. No tenant and no
employee or invitee of any tenant shall go on the roof of the Building.
2. A sign, placard, picture, name, advertisement, or notice visible from
the exterior of any tenant's Premises shall not be inscribed, painted, affixed,
or otherwise displayed by any tenant on any part of the Building without the
prior written consent of Landlord. Landlord will adopt and furnish to tenants
general guidelines relating to signs inside the Building on the office floors.
Each tenant shall conform to these guidelines, but may request approval of
Landlord for modifications, which will not be unreasonably withheld. All
approved signs or lettering on doors shall be printed, painted, affixed, or
inscribed at the expense of the tenant by a person approved by Landlord, which
will not be unreasonably withheld. Material visible from outside the Building
will not be permitted.
3. The Premises of each tenant shall not he used for the storage of
merchandise held for sale to the general public or for lodging. No cooking shall
he done or permitted by any tenant on the Premises, except that (a) each tenant
may establish and operate a lunchroom facility for use by tenant's employees,
and (b) each tenant may use and install food and beverage vending machines and
Underwriters' Laboratory approved microwave ovens and equipment for brewing
coffee, tea, hot chocolate, and similar beverages, provided that adequate
provisions are made for venting and control of odors and all facilities and
equipment are in accordance with all applicable federal, state, and city laws,
codes, ordinances, rules, and regulations.
4. No tenant shall employ any person other than Landlord's janitorial
service for cleaning the Premises, unless otherwise approved by Landlord. No
person other than those approved by Landlord shall be permitted to enter the
Building to clean it. No tenant shall cause any unnecessary labor because of
carelessness or indifference in the preservation of good order and cleanliness.
Janitor service will not be furnished on nights when rooms are occupied after
9:30 p.m. unless, by prior arrangement with Landlord, service is extended to a
later hour for specifically designated rooms.
5. Landlord will furnish each tenant, free of charge, two keys to each door
lock in the Premises. Landlord may make a reasonable charge for any additional
keys. No tenant shall have any keys made. No tenant shall alter any lock or
install a new or additional lock or any bolt on any door of the premises without
the prior consent of Landlord which will not be unreasonably withheld. The
tenant shall in each case furnish Landlord with a key for any lock. Each tenant,
upon the termination of the tenancy, shall deliver to Landlord all keys to doors
in the Building that have been furnished to the tenant.
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6. The freight elevator shall be available for use by all tenants in the
Building, subject to reasonable scheduling as Landlord deems appropriate. The
persons employed to move equipment in or out of the Building must be acceptable
to Landlord. Landlord shall have the right to prescribe the weight, size, and
position of all equipment, materials, furniture, or other property brought into
the Building. Heavy objects shall, if considered necessary by Landlord, stand on
wood strips of a thickness necessary to properly distribute the weight. Landlord
will not be responsible for loss of or damage to any property from any cause,
and all damage done to the Building by moving or maintaining property shall be
repaired at the expense of the tenant.
7. No tenant shall use or keep in the Premises or the Building any
kerosene, gasoline, or inflammable or combustible fluid or material other than
limited quantities reasonably necessary for the operation or maintenance of
office equipment, and may not, without Landlord's prior approval, use any method
of heating or air conditioning other than that supplied by Landlord. No tenant
shall use or keep any foul, noxious, or hazardous gas or substance in the
Premises, or permit or suffer the Premises to be occupied or used in a manner
offensive or objectionable to Landlord or other occupants of the Building
because of noise, odors, or vibrations, or interfere in any way with other
tenants or those having business in the Building. No pets shall be kept in the
Premises.
8. Landlord shall have the right, exercisable without notice and without
liability to any Tenant, to change the name and street address of the Building.
9. Landlord reserves the right to exclude from the Building between the
hours of 6:00 p.m. and 7:00 a.m. and at all hours on Saturdays, Sundays, and
legal holidays any person who does not present a proper access card and or other
identification as a tenant or an employee of a tenant, or who does not otherwise
present proper authorization by a tenant for access to the premises. Each tenant
shall be responsible for all persons for whom it authorizes access and shall be
liable to Landlord for all acts of these persons. Landlord shall in no case be
liable for damages for any error with regard to the admission to or exclusion
from the Building of any person. In the case of invasion, mob, riot, public
excitement, or other circumstances rendering an action advisable in Landlord's
opinion, Landlord reserves the right to prevent access to the Building during
the continuance of the circumstance by any action Landlord deems appropriate.
10. A directory of the Building will be provided to display the name and
location of tenants, their subtenants, and a reasonable number of the principal
officers and employees of tenants, and Landlord reserves the right to exclude
any other names. Any additional name that a tenant desires to have added to the
directory shall be subject to Landlord's approval and may be subject to a
charge.
11. No curtains, draperies, blinds, shutters, shades, screens, or other
coverings, hangings, or decorations shall be attached to, hung, or placed in, or
used in connection with any exterior window in the Building without the prior
consent of Landlord. If consented to by Landlord, these items shall be installed
on the office side of the standard window covering and shall in no way be
visible from the exterior of the Building.
12. Messenger services and suppliers of bottled water, food, beverages, and
other products or services shall be subject to reasonable regulations as may be
adopted by Landlord.
13. Each tenant shall see that the doors of the premises are closed and
locked and that all water faucets or apparatus, cooking facilities, and office
equipment, excluding office equipment
24
required to be operative at all times, are shut off before the tenant or
employees leave the Premises at night, so as to prevent waste or damage. For any
default or carelessness in this regard the tenant shall be responsible for any
damage sustained by other tenants or occupants of the Building or Landlord. On
multiple-tenancy floors, tenants shall keep the doors to the Building corridors
closed at all times except for ingress and egress.
14. The toilets, urinals, wash bowls, and other rest room facilities shall
not be used for any purpose other than that for which they were constructed. No
foreign substance of any kind shall be thrown in them, and the expense of any
breakage, stoppage, or damage resulting from the violation of this rule shall be
borne by the tenant who, or whose employees or invitees, have caused it.
15. Except with the prior consent of Landlord, no tenant shall sell, or
permit the sale at retail, of newspapers, magazines, periodicals, theater
tickets, or any other goods or merchandise to the general public in the
Premises, nor shall any tenant carry on, permit, or allow any employee or other
person to carry on the business of stenography, typewriting, or any similar
business in or from the Premises for the service or accommodation of occupants
of any other portion of the Building, nor shall the Premises of any tenant be
used for manufacturing of any kind, or any business or activity other than that
specifically provided for in the tenant's lease.
16. No tenant shall install any antenna, loudspeaker, or other device on
the roof or exterior walls of the Building.
17. No motorcycles or motor scooters shall be parked or stored anywhere in
the Building other than the garage of the Building, and no bicycles may be
parked or stored anywhere in the Building other than in facilities provided in
the garage or the Common Area of the Building.
18. Hand trucks or other material handling equipment, except those equipped
with rubber tires and side guards, may not be used in any portion of the
Building unless approved by Landlord.
19. Each tenant shall store refuse within that tenant's premises. No
material of a nature that it may not be disposed of in the ordinary and
customary manner of removing and disposing of refuse in the city of San
Francisco without being in violation of any law or ordinance governing this
disposal shall be placed in the refuse boxes or receptacles. All refuse disposal
shall be made only through entryways and elevators provided for these purposes
and at the times Landlord shall designate.
20. Canvassing, peddling, soliciting, and distributing handbills or any
other written materials in the Building is prohibited, and each tenant shall
cooperate to prevent this type of occurrence.
21. Smoking of cigarettes, cigars, pipes, or any other form of tobacco is
prohibited in the Building. Tenant shall not permit its employees, guest or
invitees to smoke in any portion of the Building or Premises.
22. The requirements of the tenants will be attended to only on application
by telephone or in person at the office of the Building. Employees of Landlord
shall not perform any work or do anything outside of their regular duties unless
under special instructions from Landlord.
25
23. Landlord may waive any one or more of these Rules and Regulations for
the benefit of any particular tenant, so long as Tenant's use of the Premises is
not adversely affected by the waiver, and no waiver by Landlord shall be
construed as a waiver of the Rules in favor of any other tenant, nor prevent
Landlord from later enforcing any of the Rules against any of the tenants of the
Building.
24. These Rules are in addition to, and shall not be construed to modify or
amend, in whole or in part, the terms, covenants, agreements, and conditions of
any lease of Premises in the Building.
25. Landlord reserves the right to make other reasonable rules as Landlord
judges may be needed for the safety, care, and cleanliness of the Building, and
for the preservation of good order, provided that Tenant's use and occupancy of
the Premises shall not be adversely affected by other rules.
26
Exhibit D.
CONSTRUCTION RIDER
------------------
1. Tenant Improvements
-------------------
Landlord shall, with reasonable diligence through a contractor selected by
Landlord construct and install in the Premises the improvements and fixtures
(the "Tenant Improvements") provided for on the attached Exhibit E
("Construction Documents"). Improvements consisting of the type and amount of
work and materials described on Exhibit E attached to this Construction Rider
are referred to herein as "Building Standard Tenant Improvements." All Tenant
Improvements in addition to or in substitution for or modification of the
Building Standard Tenant Improvements are referred to herein as "Above-Standard
Tenant Improvements."
2. Plans
-----
Landlord will retain Keith Hooks as the space planner/architect for the
Premises ("Space Planner") who will prepare Construction Documents for the
Premises.
Additional interior decorating services and advice on the furnishings and
decoration of the Premises, such as the selection of fixtures, furnishings,
design of millwork or other Above Standard Tenant Improvements required by
Tenant, shall be provided by Tenant at its expense, but shall be subject to the
reasonable approval of Landlord.
3. Construction
------------
Upon Landlord's receipt of the Construction Documents by the Space Planner,
Landlord shall use best efforts to cause the Tenant Improvements to be
Substantially Completed on or prior to the Scheduled Commencement Date. The term
"Substantially Complete" or "Substantial Completion" as used in the Lease or
this Agreement shall mean: (1) the shell and core of the Building are complete
and in compliance with all applicable laws, statutes, codes, rules and
regulations (collectively, "Laws") and all of the Building's heating,
ventilating, air-conditioning ("HVAC"), and plumbing, life safety, telephone
cable, mechanical and/or electrical systems (collectively, "Building Systems")
are operational to the extent necessary to service the Premises; (2) Landlord
has sufficiently completed the Tenant Improvements (except for finishing
details, minor omissions, decorations and mechanical adjustments of the type
normally found on an architectural "punch list," and minor punch list items the
completion of which will not interfere with Tenant's ability to conduct Tenant's
normal business operations in the Premises) such that Tenant can conduct normal
business operations from the Premises; and (3) Landlord has obtained a
certificate of occupancy for the Building, or a temporary certificate of
occupancy for that portion of the building that includes all of the Premises, or
its equivalent.
Following Substantial Completion of the Tenant Improvements and within
thirty (30) days after Tenant takes possession of the Premises, Landlord and
Tenant shall inspect the Premises and jointly prepare a "punch list" of agreed
items of construction remaining to be completed. Landlord shall complete the
items set forth in the punch list as soon as reasonably possible. Tenant shall
cooperate with and accommodate Landlord and its workers in completing the items
on the punch list..
The Tenant Improvements shall be limited to the Building Standard Tenant
Improvements, and any additional alterations or improvements to the Premises
desired by Tenant shall be made
27
after the commencement of the term of the Lease and shall be subject to the
provisions of Section 8- "Alterations" of the Lease.
4. Cost of Tenant Improvements
---------------------------
Landlord shall contribute up to Five Dollars and Seventy-seven Cents ($5.77) per
rentable square foot towards the cost of the Tenant Improvements (The "Tenant
Improvement Allowance") from existing "As Is" condition. The Tenant Improvement
cost to be paid from the Tenant Improvement Allowance, shall include but not be
limited to:
a) All costs of permit, architecture, engineering plans and
specifications for the Tenant Improvements.
b) All costs of obtaining building permits and other necessary
authorizations for the City of San Francisco.
c) All direct and indirect costs of procuring, constructing and installing
the Tenant Improvements in the Premises.
Tenant shall reimburse Landlord for all costs of completing the Tenant
Improvements in excess of the Tenant Improvement Allowance.
5. Changes
-------
If Tenant requests any change, addition or alteration in or to any
Construction Documents ("Changes"), Landlord shall cause the architect and
contractor to prepare additional Plans and estimates implementing such Change.
As soon as practicable after the completion of such additional plans and
estimates, the Landlord shall provide Tenant with the estimated cost of the
Changes. Within three (3) working days after receipt of such cost estimate,
Tenant shall notify Landlord in writing whether Tenant approves the Change.
If Tenant approves the Change, Landlord shall proceed with the Change and Tenant
shall be liable for any additional cost resulting from the Change including
architectural costs, permit and related fees, and all costs of construction
related to said change. If Tenant fails to approve the Change within such three
(3) day period, construction of the Tenant Improvements shall proceed as
provided in accordance with the original Construction Documents.
6. Delays
------
Tenant shall be responsible for, and shall pay to Landlord, any and all
costs and expenses incurred by Landlord in connection with any delay in the
commencement or completion of any Tenant Improvements and any additional cost
caused by (i) Tenant's failure to approve any space plan or Construction
Documents within the time periods herein, (ii) any delays in obtaining any items
or materials constituting part of the Above Standard Tenant Improvements
requested by Tenant, or (iii) any other delay requested or caused by Tenant
("Tenant Delay"). The term "Landlord Delay" as used in this Agreement, shall
mean any delay in the completion of the Tenant Improvements which is due to any
act or omission of Landlord (wrongful, negligent or otherwise), its agents or
contractors (including acts or omissions while acting as agent or contractor for
Tenant). The term Landlord Delay shall include, but shall not be limited to any:
(1) delay in the giving of authorizations or approvals by Landlord; (2) delay
attributable to the acts or failures to act, whether willful, negligent or
otherwise, of Landlord, its agents or contractors, where such acts or failures
to act delay the completion of the Tenant Improvements; and (3) delay
attributable to Landlord's failure to allow Tenant sufficient access to the
Building and/or Premises during the move-in period to move into the Premises
over one (1) weekend. In no event shall Tenants
28
remedies or entitlements for the occurrence of a Landlord Delay be abated,
deferred, diminished or rendered inoperative because of a prior, concurrent, or
subsequent delay resulting from any action or inaction of Tenant. No Landlord
Delay shall be deemed to have occurred unless and until Tenant has given written
notice to Landlord specifying the action or inaction which Tenant contends
constitutes a Landlord Delay. If such action or inaction is not cured within
five (5) business days after Landlord's receipt of such notice, then a Landlord
Delay, as set forth in such notice, shall be deemed to have occurred commencing
as of the date Landlord received such notice and continuing for the number of
days the Substantial Completion of the Premises was in fact delayed as a direct
result of such action or inaction.
Notwithstanding the Commencement Date provided in the Lease, Tenant's
obligation for the payment of rent thereunder shall not commence until Landlord
has substantially completed all work to be performed by Landlord as set forth
herein; provided, however, that
(a) if Landlord is delayed in Substantially Completing the Tenant
Improvements solely as a result of Tenant Delay, then the abatement of rent
provided for herein shall continue only until the date on which Landlord would
have Substantially Completed the Tenant Improvements but for such delays.
(b) in the event Landlord is unable to tender possession of the
Premises, Substantially Complete, to Tenant on the Scheduled Commencement Date
due to acts of force majeure delay or Landlord Delay, the Commencement Date, and
the commencement of the abatement of rent afforded Tenant, shall be postponed
until the date upon which Landlord shall tender possession of the Premises with
the Tenant Improvements Substantially Complete to Tenant. Additionally, to the
extent that Landlord is unable to so tender possession due to Landlord Delay,
Tenant shall receive one (1) additional day of rental abatement for each such
day of Landlord Delay.
7. Commencement of Term
--------------------
Upon Substantial Completion of the Tenant Improvements, Landlord shall
deliver possession of the Premises to Tenant. If Landlord has not Substantially
Completed the Tenant Improvements and tendered possession of the Premises to
Tenant on or before the Scheduled Commencement Date, or if Landlord, using its
best efforts, is unable for any other reason to deliver possession of the
Premises to Tenant on or before such date, neither Landlord nor its
representatives shall be liable to Tenant for any damage resulting from the
delay in completing such construction obligations and/or delivering possession
to Tenant and the Lease shall remain in full force and effect unless and until
it is terminated under the express provisions of this Paragraph. In such event,
the Commencement Date shall be the actual date of delivery of possession of the
Substantially Completed Premises to Tenant; provided, however, that if and to
the extent that any delays in the Commencement Date are attributable to (i)
delays by Tenant in submitting information to the Space Planner or in approving
Construction Documents, (ii) any delays in obtaining any items or materials
constituting part of the Above Standard Tenant Improvements requested by Tenant,
or (iii) any other delay requested by or caused by Tenant Delay, then the term
of the Lease shall commence and the Commencement Date shall be deemed to have
occurred on the date which Landlord would have Substantially Completed the
Premises and tendered the premises to Tenant but for such Tenant Delay.
8. Access to Premises
------------------
Landlord, at its discretion, may allow Tenant or Tenant's Representatives
to enter the Premises prior to the Commencement Date to permit Tenant to make
the Premises ready for its use
29
and occupancy; provided, however, that prior to such entry of the Premises,
Tenant shall provide evidence reasonably satisfactory to Landlord that Tenant's
insurance, as described in Section 12- "Insurance," shall be in effect as of the
time of such entry. Such permission may be revoked at any time upon twenty-four
(24) hours notice, and Tenant or its representatives shall not interfere with
Landlord or Landlord's contractor in completing the Tenant Improvements.
Tenant agrees that Landlord shall not be liable in any way for any injury,
loss or damage which may occur to any of Tenant's property placed upon or
installed in the Premises prior to the Commencement Date, the same being at
Tenant's sole risk, and Tenant shall be liable for all injury, loss or damage to
persons or property arising as a result of such entry of the Premises by Tenant
or its representatives.
9. Ownership of Tenant Improvements
--------------------------------
All Tenant Improvements except Tenant's trade fixtures, equipment and
personal property, whether Building Standard or Above Standard, and whether
installed by Landlord or Tenant, shall become a part of the Premises, shall be
the Property of Landlord and shall be surrendered by Tenant with the Premises,
without any compensation to Tenant, at the expiration or termination of the
Lease in accordance with Section 8- "Alterations" of the Lease.
[Initials of Landlord] [INITIALS APPEAR HERE]
----------------------
[Initials of Tenant] [INITIALS APPEAR HERE]
----------------------
30
Exhibit E.
Exhibit E - Construction Documents
---------
The following construction work shall be performed:
1. entire space recarpetted with 32 oz. glue-down carpet
2. entire space will be repainted
3. pursuant to attached drawing, the two work areas and several office walls
will be demolished
31